Leadership Void for Sector Predicted
The Bridgespan Group, one of our nation’s leading resources to assist nonprofit organizations, conducted a study in 2006 of leadership requirements for nonprofits with revenues greater than $250,000 (excluding hospitals and institutions of higher education). They found that over the coming decade, a leadership void will become very acute. Some of the specific findings are:
- Over the next decade, organizations will need to attract and develop as many as 640,000 new senior managers — the equivalent of 2.4 times the number currently employed.
- If the sector were to experience significant consolidation and reduce its turnover rates, this number might fall as low as 330,000.
- However, the number could also be much higher. Looking at historical growth trends in the sector, it could balloon to over 1,000,000 by 2016!
- Also by 2016, these organizations will need almost 80,000 new senior managers per year.
This projected leadership deficit results from a limited supply of emerging leaders and an increasing demand for senior managers who can lead a growing and complex sector. The primary cause is a smaller pool of individuals in Generation X coupled with the retirement of Boomers. The increasing demand for more nonprofit leaders both as staff and board will especially be felt in Alaska where we have one nonprofit for every 110 people and where ten percent of the workforce is employed in the sector. Even anecdotally we see the impact in the high volume of calls Foraker receives each week from someone who wants to start a new nonprofit.
The Bridgespan Group believes this leadership deficit can only be addressed successfully when boards and managers, as well as the funding community, recognize the problem and develop strategies to address it. They recommend:
- Invest in leadership capacity. Skilled management is the single most important determinant of organizational success. Nonprofits must invest in building skilled management teams – even if that means directing a greater proportion of funding to overhead. Philanthropy must deliver the operating support required, and boards must reinforce the importance of building management capacity and quality.
- Refine management rewards to retain and attract top talent. To recruit more and better leaders, organizations will have to structure competitive management packages, particularly in light of the push to hold managers to higher performance standards. The greatest rewards of nonprofit careers will always be intangible, but more attractive compensation is critical in times of labor shortages.
- Expand recruiting horizons and foster individual career mobility. Nonprofits traditionally tend to hire from a small circle of acquaintances. That practice is no longer sustainable. Recruitment efforts need to expand to new pools of potential leadership talent, including Boomers who wish to continue working, mid-career professionals looking for a change that allows them to make a greater social impact, and the young. At the same time, the sector will need to strengthen and expand its mechanisms for attracting and developing managers and enabling talent to flow freely throughout the sector.
Aware of this eventual crisis, The Foraker Group in partnership with the Rasmuson Foundation is engaged in its own discovery process on leadership in Alaska. A committee has formed to review what has been done to develop the state’s nonprofit leaders and what else could be done. Steve Marshall, Vice President of Operations Development at BP Alaska Inc., who also serves on the Foraker Governance Board, has agreed to chair this effort. We are excited to have such an experienced leader and committee working on the issue. To date, this is what they have determined:
- The focus of their efforts would include strategies to retain current leaders and strategies to identify and fast-track emerging leaders.
- First, identify established and emerging leaders.
- Second, recognize them, both formally and informally.
- Third, give them the opportunity to connect, learn and support one another.
- Through a series of interviews with some existing and emerging leaders, the committee discovered that the simple act of identifying and connecting leaders seems to have merit of its own.
- The committee also concluded what they did NOT need to do.
- They reviewed all existing leadership programs and determined sufficient programs, like Leadership Anchorage, already exist. Those programs should be supported – new ones don’t need to be created.
- And because The Foraker Group already provides significant skill building opportunities through its classes, Nonprofit Management Certificate, and the degree program at APU, we should examine how these existing programs could be enhanced to engage more people, especially at the leadership level.
We view these strategies as a multi-phased approach. Some aspects are easily implemented, whereas others will require planning with delivery at a point in the future. The advantage of laddering these efforts will be to create a broad-based, sustainable framework incorporating issues that are identified as the program matures.
So what can you do? We encourage all current nonprofit leaders (boards and staff) to look at their own leadership transition plan. You can start by asking a few basic questions:
- Do we have a written transition plan for all key leaders on the staff and the board?
- Do we have a budget for staff development?
- Do national or regional support systems exist for this leadership transition that we can use?
Leadership in our nonprofits should not happen by accident. All the research tells us that the quality of the board directly affects the quality of the nonprofit and that successful and sustainable nonprofits have a strong partnership between the board and the executive leader. We need both confident and competent board and staff for our sector. This is an issue that impacts far more than the immediate leadership, it touches all those who benefit from our nonprofit missions. Our hope is that each nonprofit is thinking strategically about leadership. We would welcome the opportunity to hear what successful strategies you are using or ideas you have for further implementation.